TIDMGAL
RNS Number : 3106N
Galantas Gold Corporation
31 May 2022
GALANTAS GOLD CORPORATION
TSXV & AIM: Symbol GAL
GALANTAS REPORT FINANCIAL RESULTS FOR THE QUARTERED MARCH 31,
2022
May 31, 2022: Galantas Gold Corporation (the 'Company') is
pleased to announce its unaudited financial results for the Quarter
ended March 31, 2022.
Financial Highlights
Highlights of the first quarter 2022 results, which are
expressed in Canadian Dollars, are summarized below:
All figures denominated in Canadian Dollars (CDN$)
Quarter Ended
March 31
2022 2021
Revenue $ 0 $ 0
Cost and expenses of operations $ (46,639) $ (46,148)
Loss before the undernoted $ (46,639) $ (46,148)
Depreciation $ (130,531) $ (72,065)
General administrative expenses $ (1,171,170) $ (505,097)
Foreign exchange (loss) gain $ (67,472) $ (16,653)
Net (Loss) for the quarter $ (1,415,812) $ (639,963)
Working Capital Deficit $ (1,850,980) $ (8,532,943)
Cash loss from operating activities before changes in non-cash working capital $ (577,604) $ (296,161)
Cash at March 31, 2022 $ 2,417,152 $ 487,193
Sales revenue for the quarter ended March 31, 2022 amounted to $
Nil compared to revenue of $ Nil for the quarter ended March 31,
2021. Shipments of concentrate commenced during the third quarter
of 2019. Concentrate sales provisional revenues totalled US$
219,000 for the first quarter of 2022 compared to US $ 567,000 for
the first quarter of 2021. Until the mine commences commercial
production, the net proceeds from concentrate sales are being
offset against development assets.
The Net Loss for the quarter ended March 31, 2022 amounted to $
1,415,812 (2021: $639,963) and the cash outflow from operating
activities before changes in non-cash working capital for the
quarter ended March 31, 2022 amounted to $577,604 (2021:
$296,161).
The Company had a cash balance of $2,417,152 at March 31, 2022
compared to $ 487,193 at March 31, 2021. The working capital
deficit at March 31, 2022 amounted to $ 1,850,980 compared to a
working capital deficit of $8,532,943 at March 31, 2021.
Safety is a high priority for the Company and we continue to
invest in safety-related training and infrastructure. The zero lost
time accident rate since the start of underground operations
continues. Environmental monitoring demonstrates a high level of
regulatory compliance.
The detailed results and Management Discussion and Analysis
(MD&A) are available on www.sedar.com and www.galantas.com and
the highlights in this release should be read in conjunction with
the detailed results and MD&A. The MD&A provides an
analysis of comparisons with previous periods, trends affecting the
business and risk factors.
http://www.rns-pdf.londonstockexchange.com/rns/3106N_1-2022-5-30.pdf
Qualified Person
The financial components of this disclosure have been reviewed
by Alan Buckley (Chief Financial Officer) and the production and
permitting components by Brendan Morris (COO), qualified persons
under the meaning of NI. 43-101. The information is based upon
local production and financial data prepared under their
supervision.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press
release contains forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995
and applicable Canadian securities laws, including revenues and
cost estimates, for the Omagh Gold project. Forward-looking
statements are based on estimates and assumptions made by Galantas
in light of its experience and perception of historical trends,
current conditions and expected future developments, as well as
other factors that Galantas believes are appropriate in the
circumstances. Many factors could cause Galantas' actual results,
the performance or achievements to differ materially from those
expressed or implied by the forward looking statements or strategy,
including: gold price volatility; discrepancies between actual and
estimated production, actual and estimated metallurgical recoveries
and throughputs; mining operational risk, geological uncertainties;
regulatory restrictions, including environmental regulatory
restrictions and liability; risks of sovereign involvement;
speculative nature of gold exploration; dilution; competition; loss
of or availability of key employees; additional funding
requirements; uncertainties regarding planning and other permitting
issues; and defective title to mineral claims or property. These
factors and others that could affect Galantas's forward-looking
statements are discussed in greater detail in the section entitled
"Risk Factors" in Galantas' Management Discussion & Analysis of
the financial statements of Galantas and elsewhere in documents
filed from time to time with the Canadian provincial securities
regulators and other regulatory authorities. These factors should
be considered carefully, and persons reviewing this press release
should not place undue reliance on forward-looking statements.
Galantas has no intention and undertakes no obligation to update or
revise any forward-looking statements in this press release, except
as required by law.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
Enquiries
Galantas Gold Corporation
Mario Stifano - CEO
Email: info@galantas.com
Website: www.galantas.com
Telephone: 001 416 453 8433
Grant Thornton UK LLP (Nomad)
Philip Secrett, Harrison Clarke, George Grainger, Samuel
Littler:
Telephone: +44(0)20 7383 5100
Panmure Gordon & Co (AIM Broker & Corporate Adviser)
Hugh Rich, John Prior:
Telephone: +44(0)20 7886 2500
GALANTAS GOLD CORPORATION
Condensed Interim Consolidated Financial Statements
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended March 31, 2022
NOTICE TO READER
The accompanying unaudited condensed interim consolidated
financial statements of Galantas Gold Corporation (the "Company")
have been prepared by and are the responsibility of management. The
unaudited condensed interim consolidated financial statements have
not been reviewed by the Company's auditors.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Financial
Position
(Expressed in Canadian Dollars)
(Unaudited)
As at As at
March 31, December 31,
2022 2021
------------------------------------------------------------ ----------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 2,417,152 $ 1,069,751
Accounts receivable and prepaid expenses (note 4) 731,709 1,279,935
Inventories (note 5) 13,626 108,788
------------------------------------------------------------- ----------- ------------
Total current assets 3,162,487 2,458,474
Non-current assets
Property, plant and equipment (note 6) 27,300,093 25,688,836
Long-term deposit (note 8) 492,510 513,960
Exploration and evaluation assets (note 7) 1,934,312 1,574,183
------------------------------------------------------------- ----------- ------------
Total non-current assets 29,726,915 27,776,979
------------------------------------------------------------- ----------- ------------
Total assets $ 32,889,402 $ 30,235,453
--------------------------------------------------------- ----------- ------------
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (notes 9 and 17) $ 3,026,740 $ 3,013,999
Due to related parties (note 15) 1,440,977 124,317
Leases (note 11) 545,750 416,040
------------------------------------------------------------- ----------- ------------
Total current liabilities 5,013,467 3,554,356
Non-current liabilities
Non-current portion of financing facilities (note 10) 4,199,285 4,247,488
Due to related parties (note 15) 2,462,530 2,444,376
Decommissioning liability (note 8) 575,462 600,525
------------------------------------------------------------- ----------- ------------
Total non-current liabilities 7,237,277 7,292,389
------------------------------------------------------------- ----------- ------------
Total liabilities 12,250,744 10,846,745
------------------------------------------------------------- ----------- ------------
Equity
Share capital (note 12(a)(b)) 61,876,670 57,783,570
Reserves 14,008,031 15,435,369
Deficit (55,246,043) (53,830,231)
------------------------------------------------------------- ----------- ------------
Total equity 20,638,658 19,388,708
------------------------------------------------------------- ----------- ------------
Total equity and liabilities $ 32,889,402 $ 30,235,453
--------------------------------------------------------- ----------- ------------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Going concern (note 1)
Incorporation and nature of operations (note 2)
Contingency (note 17)
Event after the reporting period (note 18)
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Loss
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2022 2021
---------------------------------------------------------------------------- ---------- ----------
Revenues
Sales of concentrate (note 14) $ - $ -
Cost and expenses of operations
Cost of sales 46,639 46,148
Depreciation (note 6) 130,531 72,065
----------------------------------------------------------------------------- ---------- ----------
177,170 118,213
---------------------------------------------------------------------------- ---------- ----------
Loss before general administrative and other expenses (177,170) (118,213)
----------------------------------------------------------------------------- ---------- ----------
General administrative expenses
Management and administration wages (note 15) 117,640 144,083
Other operating expenses 78,788 32,580
Accounting and corporate 152,979 15,184
Legal and audit 63,640 49,173
Stock-based compensation (note 12(d)) 350,539 4,631
Shareholder communication and investor relations 135,787 59,853
Transfer agent 4,015 2,861
Director fees (note 15) 35,000 8,500
General office 21,187 3,569
Accretion expenses (notes 8, 10 and 15) 120,487 104,560
Loan interest and bank charges less deposit interest (notes 10 and 15) 91,108 80,103
----------------------------------------------------------------------------- ---------- ----------
1,171,170 505,097
Other expenses
Foreign exchange loss 67,472 16,653
----------------------------------------------------------------------------- ---------- ----------
67,472 16,653
---------------------------------------------------------------------------- ---------- ----------
Net loss for the period $ (1,415,812) $ (639,963)
------------------------------------------------------------------------- ---------- ----------
Basic and diluted net loss per share (note 13) $ (0.02) $ (0.01)
------------------------------------------------------------------------- ---------- ----------
Weighted average number of common shares outstanding - basic and diluted 78,556,743 46,565,537
----------------------------------------------------------------------------- ---------- ----------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Comprehensive
Loss
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2022 2021
------------------------------------------------------------------ ---------- --------
Net loss for the period $ (1,415,812) $(639,963)
Other comprehensive loss
Items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations (870,977) (96,925)
------------------------------------------------------------------- ---------- --------
Total comprehensive loss $ (2,286,789) $(736,888)
--------------------------------------------------------------- ---------- --------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2022 2021
---------------------------------------------------------------------------- ---------- --------
Operating activities
Net loss for the period $ (1,415,812) $(639,963)
Adjustment for:
Depreciation (note 6) 130,531 72,065
Stock-based compensation (note 12(d)) 350,539 4,631
Accrued interest (notes 10 and 15) 171,614 78,874
Foreign exchange loss 93,714 79,672
Accretion expenses (notes 8, 10 and 15) 91,810 104,560
Non-cash working capital items:
Accounts receivable and prepaid expenses 567,842 260,990
Inventories 95,585 48,145
Accounts payable and other liabilities (82,217) 19,284
Due to related parties (129,249) 91,762
----------------------------------------------------------------------------- ---------- --------
Net cash and cash equivalents (used in) provided by operating activities (125,643) 120,020
----------------------------------------------------------------------------- ---------- --------
Investing activities
Net purchase of property, plant and equipment (2,458,074) (172,550)
Exploration and evaluation assets (425,831) (47,366)
Lease payments (note 11) (137,145) -
----------------------------------------------------------------------------- ---------- --------
Net cash and cash equivalents used in investing activities (3,021,050) (219,916)
----------------------------------------------------------------------------- ---------- --------
Financing activities
Proceeds from exercise of warrants 3,135,200 -
Advances from related parties 1,380,477 -
Repayment of financing facilities - (23,802)
----------------------------------------------------------------------------- ---------- --------
Net cash and cash equivalents provided by (used in) financing activities 4,515,677 (23,802)
----------------------------------------------------------------------------- ---------- --------
Net change in cash and cash equivalents 1,368,984 (123,698)
Effect of exchange rate changes on cash held in foreign currencies (21,583) (1,203)
Cash and cash equivalents, beginning of period 1,069,751 612,094
Cash and cash equivalents, end of period $ 2,417,152 $ 487,193
------------------------------------------------------------------------- ---------- --------
Cash $ 2,417,152 $ 487,193
Cash equivalents - -
------------------------------------------------------------------------- ---------- --------
Cash and cash equivalents $ 2,417,152 $ 487,193
------------------------------------------------------------------------- ---------- --------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Changes in
Equity
(Expressed in Canadian Dollars)
(Unaudited) Reserves
--------------------------------------
Equity
settled Foreign
share-based currency
translation
Share Warrants payments
capital reserve reserve reserve Deficit Total
------------------ ---------- --------- ----------- ----------- ----------- ----------
Balance, December
31, 2020 $ 52,933,594 $ 340,000 $ 8,381,382 $ 1,012,739 $(48,545,800) $14,121,915
Stock-based
compensation (note
12(d)) - - 4,631 - - 4,631
Exchange differences
on translating
foreign operations - - - (96,925) - (96,925)
Net loss for the
period - - - - (639,963) (639,963)
---------------------- ---------- --------- ----------- ----------- ----------- ----------
Balance, March 31,
2021 $ 52,933,594 $ 340,000 $ 8,386,013 $ 915,814 $(49,185,763) $13,389,658
------------------ ---------- --------- ----------- ----------- ----------- ----------
Balance, December
31, 2021 $ 57,783,570 $4,130,200 $ 10,417,260 $ 887,909 $(53,830,231) $19,388,708
------------------ ---------- --------- ----------- ----------- ----------- ----------
Warrants issued (note
15(a)(ii)) - 51,000 - - - 51,000
Stock-based
compensation (note
12(d)) - - 350,539 - - 350,539
Exercise of warrants 4,093,100 (957,900) - - - 3,135,200
Exchange differences
on translating
foreign operations - - - (870,977) - (870,977)
Net loss for the
period - - - - (1,415,812) (1,415,812)
---------------------- ---------- --------- ----------- ----------- ----------- ----------
Balance, March 31,
2022 $ 61,876,670 $3,223,300 $ 10,767,799 $ 16,932 $(55,246,043) $20,638,658
------------------ ---------- --------- ----------- ----------- ----------- ----------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2022
(Expressed in Canadian Dollars)
(Unaudited)
-------------------------------------------------------------
1. Going Concern
These unaudited condensed interim consolidated financial
statements have been prepared on a going concern basis which
contemplates that Galantas Gold Corporation (the "Company") will be
able to realize assets and discharge liabilities in the normal
course of business. In assessing whether the going concern
assumption is appropriate, management takes into account all
available information about the future, which is at least, but is
not limited to, twelve months from the end of the reporting period.
Management is aware, in making its assessment, of uncertainties
related to events or conditions that may cast doubt on the
Company's ability to continue as a going concern. The Company's
future viability depends on the consolidated results of the
Company's wholly-owned subsidiary Cavanacaw Corporation
("Cavanacaw"). Cavanacaw has a 100% shareholding in both Flintridge
Resources Limited ("Flintridge") who are engaged in the
acquisition, exploration and development of gold properties, mainly
in Omagh, Northern Ireland and Omagh Minerals Limited ("Omagh") who
are engaged in the exploration of gold properties, mainly in the
Republic of Ireland. The Omagh mine has an open pit mine, which was
in production until 2013 when production was suspended and is
reported as property, plant and equipment and as an underground
mine which having established technical feasibility and commercial
viability in December 2018 has resulted in associated exploration
and evaluation assets being reclassified as an intangible
development asset and reported as property, plant and
equipment.
The going concern assumption is dependent upon forecast cash
flows being met and further financing currently being negotiated.
The management's assumptions in relation to future levels of
production, gold prices and mine operating and capital costs are
crucial to forecast cash flows being achieved. Should production be
significantly delayed, revenues fall short of expectations or
operating costs and capital costs increase significantly, there may
be insufficient cash flows to sustain day to day operations without
seeking further finance.
Negotiations with current finance providers to extend short-term
loans have progressed positively and the maturity dates for both
the G&F Phelps Ltd. ("G&F Phelps") and Ocean Partners UK
Ltd. ("Ocean Partners") loans have now been extended to December
31, 2023 (see notes 10 and 15). During the year ended December 31,
2021, the Company raised gross proceeds of $8M through the issuance
of shares to new and current investors to meet the financial
requirements of the Company for the foreseeable future. During the
three months ended March 31, 2022, the Company raised gross
proceeds of $3M through the exercise of warrants. Based on the
financial projections prepared, the directors believe it's
appropriate to prepare the unaudited condensed interim consolidated
financial statements on the going concern basis.
As at March 31, 2022, the Company had a deficit of $55,246,043
(December 31, 2021 - $53,830,231). Comprehensive loss for the three
months ended March 31, 2022 was $2,286,789 (three months ended
March 31, 2021 - $736,888). These conditions raise material
uncertainties which may cast significant doubt as to whether the
Company will be able to continue as a going concern. However,
management is confident that it will continue as a going concern.
However, this is subject to a number of factors including market
conditions.
These unaudited condensed interim consolidated financial
statements do not reflect adjustments to the carrying values of
assets and liabilities, the reported expenses and financial
position classifications used that would be necessary if the going
concern assumption was not appropriate. These adjustments could be
material.
2. Incorporation and Nature of Operations
The Company was formed on September 20, 1996 under the name
Montemor Resources Inc. on the amalgamation of 1169479 Ontario Inc.
and Consolidated Deer Creek Resources Limited. The name was changed
to European Gold Resources Inc. by articles of amendment dated July
25, 1997. On May 5, 2004, the Company changed its name from
European Gold Resources Inc. to Galantas Gold Corporation. The
Company was incorporated to explore for and develop mineral
resource properties, principally in Europe. In 1997, it purchased
all of the shares of Omagh which owns a mineral property in
Northern Ireland, including a delineated gold deposit. Omagh
obtained full planning and environmental consents necessary to
bring its property into production.
The Company entered into an agreement on April 17, 2000,
approved by shareholders on June 26, 2000, whereby Cavanacaw, a
private Ontario corporation, acquired Omagh. Cavanacaw has
established an open pit mine to extract the Company's gold deposit
near Omagh, Northern Ireland. Cavanacaw also has developed a
premium jewellery business founded on the gold produced under the
name Galántas Irish Gold Limited ("Galántas"). As at July 1, 2007,
the Company's Omagh mine began production and in 2013 production
was suspended. On April 1, 2014, Galántas amalgamated its jewelry
business with Omagh.
On April 8, 2014, Cavanacaw acquired Flintridge. Following a
strategic review of its business by the Company during 2014 certain
assets owned by Omagh were acquired by Flintridge.
On April 17, 2020, the Company completed a share consolidation
of its share capital on the basis of ten existing common shares for
one new common share consolidation.
The Company's operations include the consolidated results of
Cavanacaw, and its wholly-owned subsidiaries Omagh, Galántas and
Flintridge.
The Company's common shares are listed on the TSX Venture
Exchange ("TSXV") and London Stock Exchange AIM under the symbol
GAL. On September 1, 2021, the Company's common shares started
trading under the symbol GALKF on the OTCQX in the United States.
The primary office is located at The Canadian Venture Building, 82
Richmond Street East, Toronto, Ontario, Canada, M5C 1P1.
In March 2020, the World Health Organization declared
coronavirus (COVID-19) a global pandemic. This contagious disease
outbreak, which has continued to spread, has adversely affected
workforces, economies, and financial markets globally, leading to
an economic downturn. It is not possible for the Company to predict
the duration or magnitude of the adverse results of the outbreak
and its effects on the Company's business or ability to raise
funds.
3. Basis of Preparation
Statement of compliance
The Company applies International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
and interpretations issued by the International Financial Reporting
Interpretations Committee ("IFRIC"). These unaudited condensed
interim consolidated financial statements have been prepared in
accordance with International Accounting Standard 34 - Interim
Financial Reporting. Accordingly, they do not include all of the
information required for full annual financial statements.
The policies applied in these unaudited condensed interim
consolidated financial statements are based on IFRS issued and
outstanding as of May 30, 2022 the date the Board of Directors
approved the statements. The same accounting policies and methods
of computation are followed in these unaudited condensed interim
consolidated financial statements as compared with the most recent
annual consolidated financial statements as at and for the year
ended December 31, 2021. Any subsequent changes to IFRS that are
given effect in the Company's annual consolidated financial
statements for the year ending December 31, 2022 could result in
restatement of these unaudited condensed interim consolidated
financial statements.
4. Accounts Receivable and Prepaid Expenses
As at As at
March 31, December 31,
2022 2021
-------------------------------------------------- --------- ------------
Sales tax receivable - Canada $ 9,181 $ 4,471
Valued added tax receivable - Northern Ireland 257,653 239,774
Accounts receivable 293,503 594,071
Prepaid expenses 171,372 281,207
Other debtors - 160,412
--------------------------------------------------- --------- ------------
$ 731,709 $ 1,279,935
-------------------------------------------------- --------- ------------
Prepaid expenses includes advances for consumables and for
construction of the passing bays in the Omagh mine.
The following is an aged analysis of receivables:
As at As at
March 31, December 31,
2022 2021
----------------------------- --------- ------------
Less than 3 months $ 538,614 $ 884,550
3 to 12 months 13,432 105,526
More than 12 months 8,291 8,652
------------------------------ --------- ------------
Total accounts receivable $ 560,337 $ 998,728
-------------------------- --------- ------------
5. Inventories
As at As at
March 31, December 31,
2022 2021
--------------------------- --------- ------------
Concentrate inventories $ 13,626 $ 108,788
------------------------ --------- ------------
6. Property, Plant and Equipment
Freehold Plant and
land and machinery Motor Office Development Assets under
Cost buildings (i) vehicles equipment assets (ii) construction Total
------------- --------- --------- -------- --------- ----------- ------------ ----------
Balance,
December 31,
2020 $2,398,171 $6,951,208 $ 162,571 $ 191,422 $ 19,345,676 $ - $29,049,048
Additions - 1,263,168 38,975 27,973 4,898,703 556,273 6,785,092
Disposals - (6,289) - - - - (6,289)
Cash receipts
from
concentrate
sales - - - - (1,412,329) - (1,412,329)
Foreign
exchange
adjustment (34,357) (99,099) (2,329) (2,742) (270,376) - (408,903)
------------- --------- --------- -------- --------- ----------- ------------ ----------
Balance,
December 31,
2021 2,363,814 8,108,988 199,217 216,653 22,561,674 556,273 34,006,619
Additions - 415,434 - 1,212 2,354,523 - 2,771,169
Disposals - - - - - (29,499) (29,499)
Foreign
exchange
adjustment (98,652) (337,016) (8,315) (9,042) (874,573) (22,242) (1,349,840)
------------- --------- --------- -------- --------- ----------- ------------ ----------
Balance,
March 31,
2022 $2,265,162 $8,187,406 $ 190,902 $ 208,823 $ 24,041,624 $ 504,532 $35,398,449
------------- --------- --------- -------- --------- ----------- ------------ ----------
Freehold Plant
land and and Motor Office Development Assets under
Accumulated
depreciation buildings machinery vehicles equipment assets construction Total
------------- --------- --------- -------- --------- ----------- ------------ ----------
Balance,
December 31,
2020 $1,986,461 $5,648,586 $ 130,107 $ 125,791 $ - $ - $ 7,890,945
Depreciation 6,347 507,731 19,776 13,992 - - 547,846
Disposals - (4,801) - - - - (4,801)
Foreign
exchange
adjustment (28,499) (83,818) (1,995) (1,895) - - (116,207)
------------- --------- --------- -------- --------- ----------- ------------ ----------
Balance,
December 31,
2021 1,964,309 6,067,698 147,888 137,888 - - 8,317,783
Depreciation 1,250 122,656 3,650 2,975 - - 130,531
Foreign
exchange
adjustment (82,021) (255,791) (6,293) (5,853) - - (349,958)
------------- --------- --------- -------- --------- ----------- ------------ ----------
Balance,
March 31,
2022 $1,883,538 $5,934,563 $ 145,245 $ 135,010 $ - $ - $ 8,098,356
------------- --------- --------- -------- --------- ----------- ------------ ----------
Freehold Plant
land and and Motor Office Development Assets under
Carrying
value buildings machinery vehicles equipment assets construction Total
------------- --------- --------- -------- --------- ----------- ------------ ----------
Balance,
December 31,
2021 $ 399,505 $2,041,290 $ 51,329 $ 78,765 $ 22,561,674 $ 556,273 $25,688,836
------------- --------- --------- -------- --------- ----------- ------------ ----------
Balance,
March 31,
2022 $ 381,624 $2,252,843 $ 45,657 $ 73,813 $ 24,041,624 $ 504,532 $27,300,093
------------- --------- --------- -------- --------- ----------- ------------ ----------
(i) Right-of-use assets of $680,520 is included in additions of
the plant and machinery for the year ended December 31, 2021.
Right-of-use assets of $283,596 is included in additions of the
plant and machinery for the three months ended March 31, 2022.
(i) Development assets are expenditures for the underground
mining operations in Omagh.
7. Exploration and Evaluation Assets
Exploration
and
evaluation
Cost assets
---------------------------- -----------
Balance, December 31, 2020 $ 750,741
Additions 834,193
Foreign exchange adjustment (10,751)
---------------------------- -----------
Balance, December 31, 2021 1,574,183
Additions 425,831
Foreign exchange adjustment (65,702)
---------------------------- -----------
Balance, March 31, 2022 $ 1,934,312
---------------------------- -----------
Carrying value
---------------------------- -----------
Balance, December 31, 2021 $ 1,574,183
---------------------------- -----------
Balance, March 31, 2022 $ 1,934,312
---------------------------- -----------
8. Decommissioning Liability
The Company's decommissioning liability is a result of mining
activities at the Omagh mine in Northern Ireland. The Company
estimated its decommissioning liability at March 31, 2022 based on
a risk-free discount rate of 1% (December 31, 2021 - 1%) and an
inflation rate of 1.50% (December 31, 2021 - 1.50%). The expected
undiscounted future obligations allowing for inflation are GBP
330,000 and based on management's best estimate the decommissioning
is expected to occur over the next 5 to 10 years. On March 31,
2022, the estimated fair value of the liability is $575,462
(December 31, 2021 - $600,525). Changes in the provision during the
three months ended March 31, 2022 are as follows:
As at As at
March 31, December 31,
2022 2021
-------------------------------------------------- --------- ------------
Decommissioning liability, beginning of period $ 600,525 $ 598,275
Accretion 2,681 10,892
Foreign exchange (27,744) (8,642)
--------------------------------------------------- --------- ------------
Decommissioning liability, end of period $ 575,462 $ 600,525
----------------------------------------------- --------- ------------
As required by the Crown in Northern Ireland, the Company is
required to provide a bond for reclamation related to the Omagh
mine in the amount of GBP 300,000 (December 31, 2021 - GBP
300,000), of which GBP 300,000 was funded as of March 31, 2022 (GBP
300,000 was funded as of December 31, 2021) and reported as
long-term deposit of $492,510 (December 31, 2021 - $513,960).
9. Accounts Payable and Other Liabilities
Accounts payable and other liabilities of the Company are
principally comprised of amounts outstanding for purchases relating
to exploration costs on exploration and evaluation assets, general
operating activities and professional fees activities.
As at As at
March 31, December 31,
2022 2021
------------------------------------------------ --------- ------------
Accounts payable $ 1,760,640 $ 1,463,316
Accrued liabilities 1,266,100 1,550,683
------------------------------------------------- --------- ------------
Total accounts payable and other liabilities $ 3,026,740 $ 3,013,999
--------------------------------------------- --------- ------------
The following is an aged analysis of the accounts payable and
other liabilities:
As at As at
March 31, December 31,
2022 2021
------------------------------------------------ --------- ------------
Less than 3 months $ 2,292,383 $ 2,246,440
3 to 12 months 93,132 98,415
More than 24 months 641,225 669,144
------------------------------------------------- --------- ------------
Total accounts payable and other liabilities $ 3,026,740 $ 3,013,999
--------------------------------------------- --------- ------------
10. Financing Facilities
Amounts payable on the Company's financial facilities are as
follow:
As at As at
March 31, December 31,
2022 2021
-------------------------------------------------------------- --------- ------------
Ocean Partners
Financing facilities, beginning of period $ - $ 2,186,272
Repayment of financing facilities - (23,802)
Accretion - 126,949
Interest - 86,820
Foreign exchange adjustment - 200,898
Financing facility reallocated to due to related parties - (2,577,137)
--------------------------------------------------------------- --------- ------------
- -
----------------------------------------------------------- --------- ------------
G&F Phelps
Financing facility reallocated from due to related parties 4,247,488 4,578,039
Less bonus warrants issued - (670,000)
Accretion 64,839 151,290
Interest 85,874 164,197
Foreign exchange adjustment (198,916) 23,962
--------------------------------------------------------------- --------- ------------
4,199,285 4,247,488
-------------------------------------------------------------- --------- ------------
Financing facilities - non-current portion $ 4,199,285 $ 4,247,488
----------------------------------------------------------- --------- ------------
11. Leases
Balance, December 31, 2020 $ -
Addition (i) 680,520
Interest expense 36,706
Lease payments (297,450)
Foreign exchange (3,736)
------------------------------- --------
Balance, December 31, 2021 416,040
Addition (ii) 283,596
Interest expense 13,513
Lease payments (137,145)
Foreign exchange (30,254)
------------------------------- --------
Balance, March 31, 2022 $ 545,750
--------------------------- --------
(i) During the year ended 2021, the Company entered into lease
agreements in respect to rent of equipments which will expire
between February 2022 to July 2022.
(ii) During the three months ended 2022, the Company entered
into lease agreements in respect to rent of equipments which will
expire June 2022.
12. Share Capital and Reserves
a) Authorized share capital
At March 31, 2022, the authorized share capital consisted of an
unlimited number of common and preference shares issuable in
Series.
The common shares do not have a par value. All issued shares are
fully paid.
No preference shares have been issued. The preference shares do
not have a par value.
b) Common shares issued
At March 31, 2022, the issued share capital amounted to
$61,876,670. The continuity of issued share capital for the periods
presented is as follows:
Number of
common
shares Amount
---------------------------------------------- ---------- ----------
Balance, December 31, 2020 and March 31, 2021 46,565,537 $52,933,594
----------------------------------------------- ---------- ----------
Balance, December 31, 2021 74,683,801 $57,783,570
Exercise of warrants 7,838,000 4,093,100
----------------------------------------------- ---------- ----------
Balance, March 31, 2022 82,521,801 $61,876,670
----------------------------------------------- ---------- ----------
c) Warrant reserve
The following table shows the continuity of warrants for the
periods presented:
Weighted
average
Number of exercise
warrants price
---------------------------------------------- ---------- --------
Balance, December 31, 2020 and March 31, 2021 1,700,000 $ 0.33
----------------------------------------------- ---------- --------
Balance, December 31, 2021 28,691,598 $ 0.39
Issued (notes 15(a)(ii)) 250,000 0.50
Exercised (7,838,000) 0.40
----------------------------------------------- ---------- --------
Balance, March 31, 2022 21,103,598 $ 0.39
----------------------------------------------- ---------- --------
The following table reflects the actual warrants issued and
outstanding as of March 31, 2022:
Grant date Exercise
Number fair value price
Expiry date of warrants ($) ($)
------------------ ----------- ---------- --------
February 3, 2023 250,000 51,000 0.50
May 14, 2023 18,453,598 2,258,947 0.40
December 31, 2023 2,400,000 913,353 0.33
------------------- ----------- ---------- --------
21,103,598 3,223,300 0.39
------------------ ----------- ---------- --------
d) Stock options
The following table shows the continuity of stock options for
the periods presented:
Weighted
average
Number of exercise
options price
---------------------------------------------- --------- --------
Balance, December 31, 2020 and March 31, 2021 570,000 $ 1.16
----------------------------------------------- --------- --------
Balance, December 31, 2021 4,885,000 $ 0.88
Expired (255,000) 1.35
Cancelled (205,000) 0.96
----------------------------------------------- --------- --------
Balance, March 31, 2022 4,425,000 $ 0.85
----------------------------------------------- --------- --------
The portion of the estimated fair value of options granted in
the prior years and vested during the three months ended March 31,
2022, amounted to $350,539 (three months ended March 31, 2021 -
$4,631).
The following table reflects the actual stock options issued and
outstanding as of March 31, 2022:
Weighted average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price ($) life (years) outstanding (exercisable) unvested
------------------ --------- ---------------- ----------- ------------- ---------
April 19, 2023 1.10 1.05 25,000 25,000 -
February 13, 2024 0.90 1.87 85,000 85,000 -
June 27, 2024 0.90 2.24 100,000 100,000 -
May 19, 2026 0.86 4.14 3,770,000 1,256,667 2,513,333
June 21, 2026 0.73 4.23 425,000 141,667 283,333
August 27, 2026 0.86 4.41 20,000 6,667 13,333
------------------ --------- ---------------- ----------- ------------- ---------
0.85 4.04 4,425,000 1,615,001 2,809,999
------------------ --------- ---------------- ----------- ------------- ---------
13. Net Loss per Common Share
The calculation of basic and diluted loss per share for the
three months ended March 31, 2022 was based on the loss
attributable to common shareholders of $1,415,812 (three months
ended March 31, 2021 - $639,963) and the weighted average number of
common shares outstanding of 78,556,743 (three months ended March
31, 2021 - 46,565,537) for basic and diluted loss per share.
Diluted loss did not include the effect of 21,103,598 warrants
(three months ended March 31, 2021 - 1,700,000) and 4,425,000
options (three months ended March 31, 2021 - 570,000) for the three
months ended March 31, 2022, as they are anti-dilutive.
14. Revenues
Shipments of concentrate under the off-take arrangements
commenced during the second quarter of 2019. Concentrate sales
provisional revenues during the three months ended March 31, 2022
totaled approximately US$219,000 (three months ended March 31, 2021
- US$567,000). However, until the mine reaches the commencement of
commercial production, the net proceeds from concentrate sales will
be offset against Development assets.
15. Related Party Disclosures
Related parties include the Board of Directors, close family
members, other key management individuals and enterprises that are
controlled by these individuals as well as certain persons
performing similar functions.
Related party transactions conducted in the normal course of
operations are measured at the exchange amount and approved by the
Board of Directors in strict adherence to conflict of interest laws
and regulations.
(a) The Company entered into the following transactions with
related parties:
Three Months Ended
March 31,
2022 2021
---------------------------------------- --------- --------
Interest on related party loans (i) $ 74,695 $ 78,876
-------------------------------- ---- --------- --------
(i) Refer to note 10(i)(ii).
(ii) On February 3, 2022, the Company announced the closing of
the loan agreement for US$1.06 million with Ocean Partners. Ocean
Partners and the Company have a common director. Terms of the loan
agreement are:
-- The loan matures on July 31, 2022 (the "Maturity Date").
-- The loan will bear interest at an annual rate of 10%
compounded monthly payable upon repayment of the loan.
-- US$20,000 structuring fee has been paid to Ocean Partners.
-- US$40,000 consulting fee will be paid to Ocean Partners, to
be invoiced separately by Ocean Partners.
-- 250,000 warrants have been granted to Ocean Partners, which
will be exercisable for a period of 12 months at an exercise price
of $0.50. The bonus warrants are subject to a hold period under
applicable securities laws and the rules of the TSXV, expiring on
June 4, 2022. The fair value of the 250,000 warrants was valued at
$51,000 using the following Black-Scholes option pricing model with
the following assumptions: expected dividend yield - 0%, expected
volatility - 107%, risk-free interest rate - 1.22% and an expected
average life of 1 year.
-- US$40,000 extension fee will be paid to Ocean Partners if the
Company elects to extend the loan for a further six months from the
Maturity Date.
Proceeds from the loan will be used for further development of
the Omagh mine in Northern Ireland and working capital.
As at March 31, 2022, financial liabilities due to the Lender
and recorded as due to related parties on the unaudited condensed
interim consolidated statement of financial position is $3,826,322
(December 31, 2021 - $2,444,376).
March 31, December 31,
2022 2021
------------------------------------------------------------ ---------- ------------
Balance, beginning of period $ 2,444,376 $ -
Financing facility reallocated to due to related parties - 2,577,137
Loan received 1,380,477 -
Less bonus warrants (51,000) (251,000)
Repayment (5,979) -
Accretion 24,290 57,338
Interest 72,227 27,506
Foreign exchange adjustment (38,069) 33,395
------------------------------------------------------------- ---------- ------------
Balance, end of period 3,826,322 2,444,376
Less current balance (1,363,792) -
------------------------------------------------------------- ---------- ------------
Due to related parties - non-current balance $ 2,462,530 $ 2,444,376
--------------------------------------------------------- ---------- ------------
(b) Remuneration of officer and directors of the Company was as
follows:
Three Months Ended
March 31,
2022 2021
----------------------------- --------- --------
Salaries and benefits (1) $ 107,583 $ 117,606
Stock-based compensation 250,310 2,258
------------------------------ --------- --------
$ 357,893 $ 119,864
----------------------------- --------- --------
(1) Salaries and benefits include director fees. As at March 31,
2022, due to directors for fees amounted to $55,500 (December 31,
2021 - $102,917) and due to officers, mainly for salaries and
benefits accrued amounted to $21,685 (December 31, 2021 - $21,400),
and is included with due to related parties.
(c) As at March 31, 2022, Ross Beaty owns 3,744,747 common
shares of the Company or approximately 4.54% of the outstanding
common shares. Premier Miton owns 4,848,243 common shares of the
Company or approximately 5.88%. Melquart owns, directly and
indirectly, 24,273,528 common shares of the Company or
approximately 29.41% of the outstanding common shares of the
Company. Eric Sprott owns 8,833,333 common shares of the Company or
approximately 10.70%. Mike Gentile owns 5,600,000 common shares of
the Company or approximately 6.79%. The remaining 42.68% of the
shares are widely held, which includes various small holdings which
are owned by directors of the Company. These holdings can change at
anytime at the discretion of the owner.
The Company is not aware of any arrangements that may at a
subsequent date result in a change in control of the Company.
16. Segment Disclosure
The Company has determined that it has one reportable segment.
The Company's operations are substantially all related to its
investment in Cavanacaw and its subsidiaries, Omagh and Flintridge.
Substantially all of the Company's revenues, costs and assets of
the business that support these operations are derived or located
in Northern Ireland. Segmented information on a geographic basis is
as follows:
March 31, 2022 United Kingdom Canada Total
------------------- -------------- --------- ----------
Current assets $ 1,029,940 $2,132,547 $ 3,162,487
Non-current assets $ 29,600,351 $ 126,564 $29,726,915
Revenues $ - $ - $ -
------------------- -------------- --------- ----------
December 31, 2021 United Kingdom Canada Total
------------------- -------------- --------- ----------
Current assets $ 1,379,742 $1,078,732 $ 2,458,474
Non-current assets $ 27,714,667 $ 62,312 $27,776,979
Revenues $ - $ - $ -
------------------- -------------- --------- ----------
17. Contingency
During the year ended December 31, 2010, the Company's
subsidiary Omagh received a payment demand from Her Majesty's
Revenue and Customs ("HMRC") in the amount of $499,553 (GBP
304,290) in connection with an aggregate levy arising from the
removal of waste rock from the mine site during 2008 and early
2009. Omagh believed this claim to be without merit. An appeal was
lodged with the Tax Tribunals Service and the hearing started at
the beginning of March 2017 and following a number of adjournments
was completed in August 2018. During the year ended December 31,
2019, the Tax Tribunals Service issued their judgement dismissing
the appeal by Omagh in respect of the assessments. A provision has
now been included in the unaudited condensed interim consolidated
financial statements in respect of the aggregates levy plus
interest and penalty.
There is a contingent liability in respect of potential
additional interest which may be applied in respect of the
aggregates levy dispute. Omagh is unable to make a reliable
estimate of the amount of the potential additional interest that
may be applied by HMRC.
18. Event After the Reporting Period
On May 3, 2022, the Company granted 1,742,500 stock options to
directors, officers, employees and consultants of the Company to
purchase common shares at $0.60 per share until May 3, 2027. The
options will vest as to one third immediately and one third on each
of May 3, 2023 and May 3, 2024.
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END
QRFDZGFKNGLGZZM
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